student loans – Hot Airhttp://hotair.com
The world’s first, full-service conservative Internet broadcast networkSat, 10 Dec 2016 01:41:13 +0000en-UShourly1https://wordpress.org/?v=4.6.116302432Student loan “forgiveness” is a fallacy because the government makes too much moneyhttp://hotair.com/archives/2016/09/04/student-loan-forgiveness-fallacy-government-makes-much-money/
Sun, 04 Sep 2016 21:01:57 +0000http://hotair.com/?p=3921053One of the issues Hillary Clinton has tried to push in her presidential runs is the idea of “debt free college.” Clinton claims her plan will be “fully paid for” by “limiting certain tax expenditures for high-income taxpayers,” and makes a bevy of other pleasant sounding promises about tuition.

Eliminate college tuition for working families. Families with income up to $125,000 will pay no tuition at in-state public colleges and universities – covering more than 80 percent of all families. From the start of this plan, every student from a family making $85,000 a year or less will be able to go to a 4-year public college or university tuition free. This income threshold will increase by $10,000 a year every year over the next four years so that by 2021, all students with a family income of $125,000 will have the opportunity to pay no tuition. She will also continue her commitment to ensure that community colleges are tuition-free for all working families.

Help students deal with all of the costs of attending college. Hillary Clinton will protect Pell Grant funding to help low- and middle-income students pay non-tuition expenses, and she will restore year-round Pell Grant funding so that students have the necessary support they need to take summer classes and meet their goal of completing college. She will make a major investment in HBCUs, Minority-Serving Institutions and other low-cost, modest-endowment private schools so that these deserving students also benefit from the lower cost of college. She will work to expand opportunities for students to earn money for expenses through term-time work and to receive college credit for national service. She will expand support for student-parents, including a fifteen-fold increase in federal funding for on-campus child care.

Clinton also wants a three month moratorium on student loan payments, which sounds awesome, right? There’s just one problem: the federal government profits too much from student loans for a “three month moratorium” to make an actual dent in the amount of cash students pay for loans. Scott Burns at The Dallas Morning Newswrites the federal government actually collects taxes on student loans (emphasis mine):

The hard part comes when the graduate has to pay back student loans. Why? Because it is done with after-tax income. While interest payments up to $2,500 a year may be deductible, principal repayment is not. So if you are in the 66 percent of people who graduate from a public college with debt and have average debt, you’ll owe $25,550 of after-tax income. With a marginal tax rate of 25 percent, that means you’ll pay back $34,067, a nice $8,517 premium for Uncle Sam…

Now let’s do a back-of-the-envelope calculation. According to the student loan debt clock, the current level of student debt is $1.435 trillion. So if Uncle Sam pulls in taxes on this amount, the total students will have to pay back, tax premium included, would be $2.13 trillion. Again, that’s an added tax premium of nearly 50 percent, about $700 billion.

See how Clinton’s promise of “debt free college” is a load of bull-turds? Clinton could require everyone making over $250K a year to pay some sort of “student loan tax,” and the student debt issues would still exist. I wrote last year how Jeb Bush’s idea of requiring universities to pay back students who take longer than four years to graduate was a bad idea because of the government’s role in student loans. A Federal Reserve Bank of New York study on the relationship between government-backed student loans and tuition increases agrees:

From the second stage, when we control for all forms of aid, we find that each additional Pell Grant dollar to an institution leads to a roughly 55 cent increase in sticker price tuition. For subsidized loans, we find a somewhat larger passthrough effect of about 70 percent. We also find a loading of tuition on unsubsidized loans of 30 percent. All of these effects are highly significant and are consistent with the Bennett Hypothesis. We further control for changes in other revenue sources at the institutional level, and the possibility that certain institutional characteristics may be correlated with both these changes and with tuition changes. We find that the subsidized loan effect is quite robust across specifications both in magnitude and significance, while the Pell Grant and unsubsidized loan effect are less so.

There are a couple solutions to how the federal government could get out of the way of student loans. Burns suggests making them tax deductible, much like small businesses do for expenses. He thinks it would give students a “better start” and would shrink the amount of debt they’re addled with. It’s a possible solution, but the “best one” is completely changing how the federal government operates from both a tax and a student loan standpoint. The federal government should start decreasing the amount of student loans it hands out per year, until it’s completely out of the loan business. I’m not sure how long that will take (maybe ten, maybe 20 years…maybe only five). The government should also start decreasing the amount of cash it hands out to universities per year. This allows public universities to start adjusting their own spending habits so they aren’t caught by surprise when all the federal money is gone. On the tax front, the government needs to reduce the corporate income tax to zero, do major cuts in government spending, and other tax overhauls so more people can keep their own money.

The biggest issue with my ideas is people are going to have to be patient. As much as I’d love to just immediately slice something off, it’s not the wisest of moves. Of course, the flip side is the fact the federal government never really seems willing to go through with spending decreases. It’d take a strong show of spine by fiscal conservatives and libertarians in and out of Congress (and in state legislatures) to make sure the government doesn’t renege on its promise of spending cuts. It also requires people to be willing to be patient and ride out of the storm when complaints start rising up. Fiscal sanity matters. It just depends on if people (and governments) are willing to show it.

]]>3921053Reason: Going Red a “fascinating,” “deeply-reported” look into 2016 and beyondhttp://hotair.com/archives/2016/04/29/reason-going-red-a-fascinating-deeply-reported-look-into-2016-and-beyond/
Sat, 30 Apr 2016 01:21:35 +0000http://hotair.com/?p=3903276Reason’s Nick Gillespie and I have had a years-long conversation about conservatism and libertarianism, so talking with Nick about Going Red felt like an extension of that topic. Reason Magazine published the interview yesterday, and offered some very kind words about Going Red, too. Not surprisingly, Nick was most interested in how Republicans and conservatives can reach out effectively to more liberty-minded millennials:

Though Morrissey is openly rooting for a Republican victory (unlike many conservatives, he hasn’t even joined the #NeverTrump movement), Going Red is a deeply reported attempt to understand how different groups of voters in different parts of the country have very different issues and concerns. He traveled extensively to seven swing counties in seven different states (Florida, Ohio, Colorado, New Hampshire, and more) to analyze and understand exactly how Democrats and Republicans have connected—or failed to connect—with residents. In Wake County, North Carolina, for instance, Morrissey talks to young libertarian Republicans who tell him that although “all the energy is with the young, the more libertarian movement,” the party generally seems “openly hostile” to a message that stresses “we’re not going to tell you how to live your life.”

The result is a ground-level tour of how actual voters think about actual issues. True to his roots in decentralized online media (not so long ago, Morrissey was a call center operator who blogged on the side), he stresses that political operations have to take cues from business and cultural enterprises that flatten hierarchies and empower two-way conversations.

Regardless of your political persuasion, the results are fascinating for anyone interested in how retail politics must be remade in an age of ubiquitous media, ground-up messaging, and the not-so-slow death of establishment parties.

More than any other demographic data, it’s the millennials that should worry the GOP and conservative movement. The nature of the next generations of voters will change the electorate — and already are — which makes connections to younger voters essential. That means having answers for their biggest concerns and issues, and as Olivier Knox on SiriusXM’s POTUS channel and of Yahoo News notes, the biggest economic issue facing this generation is student-loan debt. In an interview I did earlier this week, we discussed the millennials in particular:

In order to win elections in the future, Republicans and conservatives have to do the hard work now of engaging voters where they are and for who they are. In 2016, that effort has to take place in the key swing counties of the seven states covered in Going Red — or we will lose another four years to statism and progressive politics.

]]>3903276Busted for student loan debt? Apparently it can happenhttp://hotair.com/archives/2016/02/16/busted-for-student-loan-debt-apparently-it-can-happen/
http://hotair.com/archives/2016/02/16/busted-for-student-loan-debt-apparently-it-can-happen/#commentsTue, 16 Feb 2016 19:41:44 +0000http://hotair.com/?p=3893858So, how many of you have some student loans lurking in the back of your credit closet that you just haven’t gotten round to paying off? If you do you’re clearly not alone, since according to one study from Forbes last year the rate of federal student loans in default varies anywhere from roughly 11 to 15% from year to year. We’re talking about many millions of people. But what’s the worst that can happen if you just keep putting it off? Well, if you happen to live in Houston you may wind up with the US Marshals beating on your door and hauling you off for questioning.

Believe it or not, the US Marshals Service in Houston is arresting people for not paying their outstanding federal student loans.

Paul Aker says he was arrested at his home last week for a $1500 federal student loan he received in 1987.

He says seven deputy US Marshals showed up at his home with guns and took him to federal court where he had to sign a payment plan for the 29-year-old school loan.

Before continuing, here’s the brief video from Fox 26 in Houston providing the details.

So wait a minute… you can’t actually go to jail for not paying your loan, can you? According to Geeks on Finance, the answer is usually no, but there are exceptions. One of the most common of these is child support, where you can definitely wind up in jail after a while. Depending which state you live in, there are some other oddball scenarios as well. If a prosecutor really wants to invest the time, and they can prove that you took the loan with no intention of ever paying it back you could conceivably be prosecuted (and jailed) for some form of fraud, but that’s not the same as being locked up for the actual debt. If the Marshals bring you in and demand that you sign a contract agreeing to have your wages garnished, they might be able to jail you for a while if you refuse. But mostly they’ll just trash your credit rating to the point where you can’t even rent an apartment, say nothing of buy a home.

But the bottom line here is that a student loan is still a loan. You took it out and signed on the line agreeing to repay it. If the rates were too high or it was more debt than you could reasonably afford to take care of, isn’t that really on you and not the government? Not if you listen to the Democrats. There are already multiple ways to have your debt “forgiven” for you, and if they can manage a few more reforms there will be even more opportunities!

And for all of you old timers out there who actually paid off your loans because you felt like it was an obligation on your part, well… sucks to be you, I suppose.

]]>http://hotair.com/archives/2016/02/16/busted-for-student-loan-debt-apparently-it-can-happen/feed/963893858FYI: You’re paying to persecute a conservative college professorhttp://hotair.com/archives/2015/11/14/fyi-youre-paying-to-persecute-a-conservative-college-professor/
http://hotair.com/archives/2015/11/14/fyi-youre-paying-to-persecute-a-conservative-college-professor/#commentsSat, 14 Nov 2015 22:31:48 +0000http://hotair.com/?p=3884087As everyone and their brother knows, Yale and the University of Missouri are facing manufactured crises-turned-real-crises as students (and, occasionally, professors and administrators) demand everything but the kitchen sink be given to accommodate demands of “safe space” from things like reality and the U.S. Constitution.

As these events start to lose traction in the media cycle, a new story is popping up on the other side of the political spectrum: that of Professor Robert Lopez, a bisexual man raised by lesbians who is married with kids and — brace yourself — opposes redefining marriage.

And for the crime of giving students an option to present at a pro-family conference he helped organize, Lopez may lose his job at the taxpayer-funded California State University at Northridge (CalState).

Now, he says the university violated policies when it targeted him, and he is threatening legal action against the university for violations of California employment and civil rights law.

University policy states that it will complete investigations “no later than 60 working days after the intake interview,” with a 30-day extension if necessary. However, in a deposition, the university told Lopez he was investigated after formal charges were filed in May.

Lopez also points out that the deposition says the allegations made against him by a female student “were similar to the allegations made” by two students “about the conference just days after it took place on October 3” of last year – meaning the investigation apparently started in 2014.

The university eventually found Lopez innocent of discrimination, but last month found him guilty of retaliation against a student. Lopez says the “retaliation” claim is clearly bogus, pointing to how the student in question got an “A” in his class, even after reporting him, and that there is no documented proof of retaliation.

In a letter to the university, Lopez’s attorney — Charles LiMandri with the Freedom of Conscience Defense Fund — wrote that the finding of retaliation violated university policy, noting that while “intimidation” and “retaliation” have high bars in official university documents, the charges against Lopez are based upon conversation fragments that took place seven months apart.

“In sum, this evidence does not even begin to meet the CSUN’s own standard for ‘retaliation,'” says the letter. “Under these circumstances, we have no choice but to conclude that the disposition of this investigation is purely political and ideological attack on Dr. Lopez for holding — and exposing his students to — ideas about children’s right in the context of family and reproduction which are apparently unpopular at CSUN.”

To be clear: Lopez’s views are well outside the norm for the university setting. For example, while he told me last year he could in theory support same-sex “marriage,” the effects on children are such that he cannot back it.

However, for a taxpayer-funded university that claims to value diversity, targeting Lopez is the height of hypocritical censorship. It’s also in violation of their policies, and — I have to think — probably illegal.

This story has finally gotten traction this month, with stories by LifeSiteNews* Campus Reform, The Daily Caller, The Washington Times, and a Drudge Report link — among other outlets — and even a Huffington Post op-ed. Three petitions have been launched, as well, including one by LifeSiteNews* that you can sign here.

The story has yet to break into mainstream media, but the campus is already responding to pressure, sending a statement to me for a piece at The Daily Signal, and the same one later in the week to The Washington Times.

Only time will tell whether CalState’s free-speech warriors will defend Lopez even if they don’t agree with him. Likewise, the cynic in me doubts that the same mainstream and liberal press that hounded the University of Missouri chancellor and president into retirement for, well, nothing will cover an actual attack on constitutional and human rights by university administrators. In the meantime, it can only help if Hot Air readers sign allthreepetitions, especially if you live in California.

]]>http://hotair.com/archives/2015/11/14/fyi-youre-paying-to-persecute-a-conservative-college-professor/feed/283884087Millennial hawk: Why the GOP needs to answer Hillary’s $350B college subsidy planhttp://hotair.com/archives/2015/08/13/millennial-hawk-why-the-gop-needs-to-answer-hillarys-350b-college-subsidy-plan/
http://hotair.com/archives/2015/08/13/millennial-hawk-why-the-gop-needs-to-answer-hillarys-350b-college-subsidy-plan/#commentsThu, 13 Aug 2015 20:41:34 +0000http://hotair.com/?p=3873420Forget the Twitter bleg for emoji responses to how millennials feel about student debt. As the New York Daily News’ Alejandro Alba notes, the condescending approach didn’t generate much respect from Hillary Clinton’s target audience. The beleagured Democrat tried to shift attention to policy from the e-mail scandal, focusing on her $350 billion proposal to overhaul higher-education finances, which is in a shambles largely due to federal government intervention in the first place.

Mission not accomplished:

While some users thought the question was “relatable,” others believed the question was offensive and condescending.

Many users began to reply to the tweet with jokes and alternate versions of the question.

“How does finally handing over your server to federal investigators make you feel? Tell us in three emojis or less,” replied @Benc jacobs.

The execution may have been poor, but Hillary aimed at the right target. She has to find a way to engage the millennial vote in the next election (assuming she can win the nomination), as well as progressives that are currently lifting Bernie Sanders to rock-star status. It’s bad policy but smart politics, as I argue in my column today for The Fiscal Times, and Republicans cannot afford to ignore it:

In order to get a share of Obama’s energy for a general election, Hillary has to pander to younger voters, as well as the less affluent and minority demographics. Those voters have a massive student loan burden, largely thanks to those pushing government subsidies that inflated the higher education bubble in the first place. For older Americans, the chief economic issue will be jobs and growth, but younger voters have a more acute situation.

They need real solutions to their debt burden, and will likely see that as a key issue in any economic plan from the Parties and the candidates. This is her bid to gain traction in demographic categories that might otherwise write her off as a holdover from a nearly bygone political era. …

Republicans have a real chance to make inroads among younger voters in this election cycle. Not only will Obama finally retire from the scene and with him the emotional connection that sustained Democrats in the last two cycles, but all of the potential Democratic successors are pushing 70 or past it. Sanders is already 74, and will be 75 on Election Day. Joe Biden, the Flavor of the Week as Hillary’s legal woes expand, will be almost 73, and has been in Washington nearly twice as long as the Clintons have.

In comparison, most of the Republican field is far younger. Donald Trump will be 70 next year, and Rick Perry 65, but the rest of the field is significantly younger. Ted Cruz, Marco Rubio, Bobby Jindal, and Scott Walker are all in their 40s and the rest in their 50s. That won’t be enough, though. Republicans have to address the real issues facing these millennials, especially those created by activist government and top-down market interventions that have rendered them unable to acquire wealth in the traditional manner even after they got their college degrees. If Hillary Clinton’s proposal remains unanswered, or simply shrugged off without any substantive policy option to offer, millennials will gravitate to the party that at least speaks to their lives.

Here’s a fun fact: Any one of those Democratic contenders — Hillary, Biden, or Sanders — would be the oldest non-incumbent presidential nominee in the party’s history. The current record-holder is Lewis Cass, who lost to Zachary Taylor in 1848 at the age of 66. Other than Martin O’Malley, who blew his opening at Netroots Nation this summer, the field resembles the later-stages Soviet Politburo when it comes to youth and vigor.

Even so, Republicans have to actually make a case on policy to keep Hillary from buying their support with another destructive top-down entitlement system. If Hillary’s plan is an encroachment on state funds and operations (it is), then Republican candidates need a plan that will work on a plan to address the crushing debt that progressive policies have created for millennials. They need to talk about it, feature it in campaign speeches (especially on campuses), and explain why conservative principles and policies will improve their lives directly, and not just in general terms.

There’s still plenty of time for the GOP to build this case, but they’d better have a plan to address it at some point before the end of the primaries. Otherwise, we’ll end up conceding the voters that will be deciding elections for a long, long time.

]]>http://hotair.com/archives/2015/08/13/millennial-hawk-why-the-gop-needs-to-answer-hillarys-350b-college-subsidy-plan/feed/693873420Hillary: Let’s spend $350 billion to make college … affordable?http://hotair.com/archives/2015/08/11/hillary-lets-spend-350-billion-to-make-college-affordable/
http://hotair.com/archives/2015/08/11/hillary-lets-spend-350-billion-to-make-college-affordable/#commentsTue, 11 Aug 2015 12:41:46 +0000http://hotair.com/?p=3873068Perhaps Hillary Clinton has a different definition of “affordable” than most of us. A plan that spends $350 billion can be defined as many things, but affordable is not on that list. Still, Hillary’s plan raises the stakes among a demographic that Democrats cannot afford to lose:

Hillary Rodham Clinton will announce a $350 billion plan Monday to make college affordable and relieve the burden of student debt for millions of Americans, drawing on popular tenets of the progressive wing of the Democratic Party. …

At the heart of the plan, dubbed the New College Compact, is an incentive program that would provide money to states that guarantee “no-loan” tuition at four-year public universities and community colleges. States that enroll a high number of low- and middle-income students would receive more money, as would those that work with schools to reduce living expenses. Because Pell grants, a form of federal aid for students from families making less than $60,000, are not included in the no-debt calculation, Clinton anticipates lower income students could use that money to cover books, as well as room and board.

In other words, it’s a big giveaway to the millennials, which are the voters Democrats can’t afford to have sitting on the sidelines in November 2016. Ever since the government took over the student loan industry a few years ago under Barack Obama, those burdened with student loans have wanted a debt-forgiveness plan that would free them from the yoke of astronomical debt, largely created by the bubble that government inflated in the first place. They got student loans through taxpayer-backed federal guarantees, and now they want to default on those loans and have taxpayers pick up the tab for their tuition, too.

Hillary proposes that taxpayers freeze capital to pay for tuition, room, and board for college students in the future. The problem with that plan is that even without interest, those students will face large debt loads, as they do now. Meanwhile, taxpayers in the states will front that cash with federal guarantees. What happens when those students can’t or won’t pay those loans back? It will require a massive bailout.

And guess who picks up the tab for making college affordable?

Although Clinton doesn’t mention the word “free” in her proposal, the basic foundation is the same as legislation Sanders introduced in May that would eliminate tuition at four-year public colleges through federal investment. But instead of taxing Wall Street transactions as Sanders has proposed, Clinton would close tax loopholes to pay for her plan.

“Closing loopholes” means tax hikes. One way or another, taxpayers who have been backing these student loans for decades while government subsidies stoked demand and sent tuition prices skyrocketing will pay through the nose for “affordability.” It’s yet another government-induced price spiral, not altogether unlike the Affordable Care Act, which has proven to be anything but — which also relies on massive taxpayer subsidies, and which will also require massive taxpayer bailouts in the end.

One might wonder why, when we borrow 40% of the money the federal government spends, that we’re discussing a $350 billion plan at all for anything except defense. But if the government wants to spend money on education, perhaps a better target would be primary education, and a better plan would be school choice to better prepare students for higher education down the road. Perhaps we can teach them the real definition of affordable somewhere along the way, too.

]]>http://hotair.com/archives/2015/08/11/hillary-lets-spend-350-billion-to-make-college-affordable/feed/753873068Obama’s student-loan program $22 billion in the hole for FY2015http://hotair.com/archives/2015/02/05/obamas-student-loan-program-22-billion-in-the-hole-for-fy2015/
http://hotair.com/archives/2015/02/05/obamas-student-loan-program-22-billion-in-the-hole-for-fy2015/#commentsThu, 05 Feb 2015 13:41:33 +0000http://hotair.com/?p=3225018In the federal budget, just how big a hole would $22 billion be? As Michael Grunwald points out at Politico, that’s “larger than the annual budget for NASA, or that of the Interior Department and EPA combined[.]” And the shortfall is entirely due to the changes Barack Obama has made to student-loan programs — and could grow to ten times that amount over the next decade:

In obscure data tables buried deep in its 2016 budget proposal, the Obama administration revealed this week that its student loan program had a $21.8 billion shortfall last year, apparently the largest ever recorded for any government credit program.

The main cause of the shortfall was President Barack Obama’s recent efforts to provide relief for borrowers drowning in student debt, reforms that have already begun to reduce loan payments to the government. For more than two decades, budget analysts have recalculated the projected costs of about 120 credit programs every year, but they have never lowered their expectations of repayments this dramatically. …

That’s a big quasi-bailout, increasing the deficit nearly 5 percent. The White House budget office was unaware of any larger re-estimates since the current scoring rules for credit programs went into effect in 1992. As a January Politico Magazine feature on the government’s unusual credit portfolio reported, the Federal Housing Administration has stuck more than $75 billion worth of similar re-estimates onto Uncle Sam’s tab over the last two decades, most of them after the recent housing bust led to a cascade of FHA-backed mortgage defaults. But it’s never had a one-year shortfall quite as drastic as this.

It’s not yet clear whether this will be a hefty one-time revision, or a harbinger of oceans of red ink as millions more borrowers get relief on their payments to the government. Several reports by Barclays Capital have warned that Obama’s generosity to borrowers could leave the student loan program as much as $250 billion in the hole over the next decade. And behind closed doors, officials in the White House budget office and the Treasury Department have criticized the Education Department’s loan models as overly optimistic, with some officials pushing internally for third-party audits.

Wait, what? You can’t get something for nothing? Color me shocked, shocked to find out that having the government take over student loans and then increase their lending by 44% in the past two years produced a flood of red ink.

Recall that Obama insisted on a government takeover of the student-loan industry because banks weren’t lending generously enough for Obama’s tastes and were profiting too much off of government guarantees. In FY2008, the budget for the Direct Loan program was $500 million. Now that the DLP is the only game in town, the annual shortfall in DLP is 430 times the annual budget in FY2008. Think about that for a moment. This is why lending programs work best when the stakeholders can’t just print their own money.

This comes up at a very bad time for the next Obama giveaway, “free” community college education. The White House tried to claim that the program would “only” cost $60 billion over the next decade, while serving 9 million students. However, the average tuition for 9 million students would put the actual cost at $34 billion each year, and that’s assuming that the flood of government subsidies doesn’t push demand and price up significantly, just as the student-loan takeover did.

Oh, and that $22 billion will go directly against the deficit, and Congress can’t do anything about it, as it’s structured as an entitlement. What they can do is take money out of Obama’s other programs to cover the gap, and that’s exactly what they should do — while explaining very loudly why it’s necessary, and why we need to end this “quasi-bailout” of the university system forthwith.

]]>http://hotair.com/archives/2015/02/05/obamas-student-loan-program-22-billion-in-the-hole-for-fy2015/feed/593225018Arne Duncan: No, we don’t actually know the cost of our student loan programhttp://hotair.com/archives/2014/06/11/arne-duncan-no-we-dont-actually-know-the-cost-of-our-student-loan-program/
http://hotair.com/archives/2014/06/11/arne-duncan-no-we-dont-actually-know-the-cost-of-our-student-loan-program/#commentsWed, 11 Jun 2014 21:01:41 +0000http://hotair.com/?p=311605An unsurprising yet groan-inducing addendum to the empty gestureexecutive order President Obama so magnanimously introduced this week to allow millions of student-loan borrowers to cap their monthly payments at 10 percent of their current income and then be fully forgiven after 20 years — a “favor” to borrowers to lessen their burdens that will, in the long run, only serve to inflate future tuition prices and borrowing costs ever further. I missed this on Monday, but the WFB didn’t:

SECRETARY OF EDUCATION ARNE DUNCAN: We actually don’t know the cost yet. Obviously we have to go through this regulatory process, so we’ll figure that out the back end. But we think this is something that will be fantastic for the economy. … We’ll work through the details as we go through the regulatory process.

Translation: Don’t know, don’t really care.

Anyhow, speaking of government-issued ostensible favors to student borrowers that actually end up worsening their problems, Sen. Elizabeth Warren’s even larger and similarly perverse-incentivizing student-loan proposal was shot down in the Senate this morning, at least for now:

The Senate on Wednesday voted not to move forward on a bill from Sen. Elizabeth Warren that would have allowed an estimated 25 million people with older student loans to refinance that debt at current, lower interest rates.

Democrats are vowing to keep the issue alive and bring it back for another airing this year. …

“We’re not giving up,” Warren said at a press conference shortly after the vote, slamming Republicans for blocking the bill. …

Warren’s bill would pay for refinancing students’ loans by raising taxes on the wealthy, a guaranteed non-starter for Republicans in the Senate and the House. Sen. Chuck Schumer (D-N.Y.) — who Tuesday said Democrats will bring it back to the floor in the future if it fails to pass Congress — has in the past said that paying for a student loan bill using the so-called “Buffet rule” is a surefire way to politicize it.

]]>http://hotair.com/archives/2014/06/11/arne-duncan-no-we-dont-actually-know-the-cost-of-our-student-loan-program/feed/38311605So, is Obama’s student-loan executive order actually going to do anything to mitigate rising tuition prices?http://hotair.com/archives/2014/06/10/so-is-obamas-student-loan-executive-order-actually-going-to-do-anything-to-mitigate-rising-tuition-prices/
http://hotair.com/archives/2014/06/10/so-is-obamas-student-loan-executive-order-actually-going-to-do-anything-to-mitigate-rising-tuition-prices/#commentsTue, 10 Jun 2014 21:01:31 +0000http://hotair.com/?p=311382No.]]>Noah already covered the reliable Republican-bashing optics of President Obama’s latest attempt to rope in young people with the allure of super-free stuff, but I just wanted to take a quick look at the unintended-yet-entirely-predictable consequences of the White House’s oh-so-munificent executive action that is ostensibly meant to lessen students’ debt burdens. Via WaPo:

In an attempt to further ease heavy college debt, President Obama on Monday signed an executive order allowing millions of student-loan borrowers to cap their payments at 10 percent of their monthly income.

Flanked by students and recent graduates who borrowed money to go to school, Obama said the cost of college and burden of student debt are suffocating middle-class families and putting students at an economic disadvantage before they enter the workforce. …

Most student-loan borrowers already have the option to limit payments to 10 percent of their income under recent legislation and regulations. Obama’s order on Monday extended that option to about 5 million others who were not covered by the previous changes, including those who took out loans before October 2007. …

Obama has publicly endorsed legislation sponsored by Sen. Elizabeth Warren (D-Mass.) that would allow students to refinance both public and private loans at lower interest rates. It would be paid for by closing a tax loophole available to the wealthy.

The real, most fundamental problem with crushing student loan debt is, of course, that it is so very crushing. Traditional college tuition prices have been on a continuous upswing far outstripping inflation for going on several decades now, largely helped along by the fact that the federal government has stepped in as a cheap and indiscriminate lender to anyone and everyone looking for any type of student loan.

President Obama’s executive order is a relatively small item, but it certainly isn’t going to do diddly squat to help pay down the more than $1.2 trillion debt bubble currently plaguing students, and nor is sending out the precisely wrong message to future borrowers: We’re going to make it even easier than it already is for you to take out even more and even bigger loans. How do you suppose colleges and universities will respond to that message? By, in turn, raising their prices, perhaps? And might apparently cheaper loans factor into potential students’ personal cost-benefit analyses when evaluating their education/career ideas and future prospects, perhaps tipping the scales in favor of less wise investments? Even worse than Obama’s executive order, however, is Sen. Warren’s proposed legislation, which is an even larger item that creates even more of these perverse incentives.

In the name of helping them, federal politicians, and many other people, massively oversell higher education to the detriment of students. Perhaps as much as half of people who enter college don’tfinish; a third of people with a bachelor’s degree are in jobs not requiring the credential; underemployment is even worse for graduate-degree holders, and; cheap college has almost certainly fueled credentialinflation, not major increases in knowledge or skills.

Decreasing what borrowers will repay means taxpayers – who had no choice in whether the loans were made – have to make up the difference. And there is a little matter of being nearly $18 trillion in debt already.

There is no such thing as a free lunch, or a free education at a liberal arts college for that matter — and teaching students otherwise is not doing them any favors.

Stewart is the “destroyer,” as Williamson dubbed him, because he is so often depicted by his fans as “destroying” this or the other conservative shibboleth. Even if Stewart doesn’t quite “destroy” but merely dings his target, he is credited with a great goring of someone’s ox. It feels mechanical and obligatory.

That same pressure to “destroy” and be credited with that destruction is falling on both President Obama and his admirers. On Monday, the president announced a proposal which would allow students to refinance their student loans in order to reduce the cost associated with attending college. Legislation proposed in the Senate to enact this student loan reform, which the CBO estimates would cost the government $51 billion through 2024, would be financed through yet another income tax hike on those making more than $1 million. It is unlikely to meet with approval from House Republicans.

For that reason alone, this is a political proposal likely aimed at energizing presently disengaged younger voters. If you were thinking of giving the president the benefit of the doubt and prefer to believe that Obama is not merely crafting a crass political cudgel for the 2014 election cycle with his latest proposal, you were let down when Obama confirmed the worst suspicions of his critics.

Announcing that he was departing from his prepared text, Obama chewed the scenery when he preemptively lashed out at conservatives for opposing his latest common sense proposal.

“I don’t know, by the way, why folks aren’t more outraged by this,” Obama wondered. “It would be scandalous if we allowed those kinds of tax loopholes for the very, very fortunate to survive while students are just getting started with their lives.”

“I want Americans to pay attention to see where their lawmakers’ priorities lie here,” the president lectured. “You’ve got a group of far-right Republicans in congress who push this trickle-down economic plan, telling hard working students and families you’re on your own.”

“If you’re a big oil company, they’ll go to bat for you,” the president asserted. “If you’re a student, good luck.”

“Some of these Republicans in Congress seem to believe that it’s just because — that just because some of the young people behind me need some help, that they’re not trying hard enough,” he concluded. “They don’t get it.”

To this tired retread, one expects the usual fawning reviews from Obama’s coterie of devotees; Obama “burns,” “schools,” “obliterates,” “annihilates,” “drops mic on,” or even the overused “destroys” his GOP opponents. But the predictable call-and-response has lost its sting, and you get the impression that both Obama and his Pavlovian supporters in the center-left political press are merely going through the motions.

One day in the near future, though probably not today, Obama will issue one of his exhausted broadsides against the Republican caricature he has so often lambasted, but the predictable response will not materialize. His supporters will no longer be satisfied with rhetorical victories alone. That day is not today, but it is coming.

]]>http://hotair.com/archives/2014/06/09/obama-ad-libs-umpteenth-dramatic-attack-on-republicans/feed/98311145How the student loan debt bubble hurts the poorhttp://hotair.com/archives/2014/05/13/how-the-student-loan-debt-bubble-hurts-the-poor/
http://hotair.com/archives/2014/05/13/how-the-student-loan-debt-bubble-hurts-the-poor/#commentsTue, 13 May 2014 20:01:09 +0000http://hotair.com/?p=307947We’re all aware of the student loan debt bubble and how it has quadrupled in the last ten years. Student loans are the second largest component of household debt now, behind only mortgages. Higher education has been posed as a solution for the problem of economic mobility for everyone in America, and as a result, more and more Americans are stretching themselves thin and taking on more debt in order to get a college education.

What goes unmentioned is how the societal norm that is pushing more people into college has the same effect on low-income Americans who are most affected by the debt burden. A new Brookings Institute study finds that student debt makes up a massive portion of household income:

College attendance is still a good idea for the average student, but it’s increasingly difficult for the marginal student. It’s unclear whether or not low-income students comprise more marginal students than the other income quintiles, but it is clear that the downside of an inability to complete a higher education would take a much greater toll on low-income households than it would on higher-income households.

What’s more, defaults on student loans are rising. Even if we assume that defaults are spread evenly across the income groups, a default is worse for a student in a low-income group than in the higher-income groups by mere fact that a student loan comprises a higher percentage of their assets than otherwise.

What this means is that, at the same time, more low-income students feel the need to go to college and are risking more to do so. The federal government has been pushing to expand access to higher education to more and more people, but at the expense of the marginal students. Going to college still isn’t free, even with subsidized loans. As the costs of going to college rise, so do the inherent risks. We might need to re-evaluate our national norms around the value of college for all.

]]>http://hotair.com/archives/2014/05/13/how-the-student-loan-debt-bubble-hurts-the-poor/feed/57307947Sen. Warren: Hey, let’s help students refinance their loans by raising taxes on the wealthy!http://hotair.com/archives/2014/05/07/sen-warren-hey-lets-help-students-refinance-their-loans-by-raising-taxes-on-the-wealthy/
http://hotair.com/archives/2014/05/07/sen-warren-hey-lets-help-students-refinance-their-loans-by-raising-taxes-on-the-wealthy/#commentsWed, 07 May 2014 22:41:29 +0000http://hotair.com/?p=307296The Democrats’ push to hike the national minimum wage is merely the crown jewel in the so-called “fair shot” agenda that they hope will erase ObamaCare from voters’ minds by the time they hit the ballot box this November; the next action item on their intellectually (not to mention fiscally) bankrupt list is a similarly redistributive and equally lame pander to the young people who have lately been electorally shuffling away from them. Sen. Elizabeth Warren, it’s your cue:

Warren, a Massachusetts Democrat, is poised to introduce a bill which, in part, would allow people holding student loans financed at rates higher than today’s interest rate to refinance those loans, similar to the way one refinances a home mortgage or car loan.

“When interest rates drop, people can refinance their home, they can refinance their business debt. It’s regarded as a smart move for any consumer or business. But student borrowers are prohibited from doing that under most programs,” Warren told MassLive.com. “This bill says we’re going to change that and let them refinance that down to current low rates.” …

“This is $66 billion on just the loans issued during that period. That is insane,” Warren said. “This (bill) brings that down. Instead of taxing students who can’t afford to pay for college up front, it says we are investing in those students.”

It’s funny she would refer to the $66 billion in interest that the federal government, i.e. taxpayers stand to earn on the money they lent to students between 2007 and 2012 as a “tax,” because that brings us to how Warren proposes to pay for this generous “refinancing” opportunity. Surprise, surprise:

But since cutting something that has generated such a huge profit over just five years will place a hole in the already-stretched federal budget, Warren is proposing a solution, albeit one that is bound to be viewed as being as political as it is practical. …

Enacting the Buffett Rule, which Republicans in the Senate voted to kill in 2012 calling it a “political stunt,” would increase the income tax rate of Americans earning more than $1 million annually. The money generated through that move, according to Warren, would make the difference and send a message about the nation’s “values.”

“The act covers the full budgetary cost of refinancing by implementing the Buffett Rule. Basically, the way I see it, there are billions of dollars here that flow out of the U.S. Treasury to a tax loophole, that are available to millionaires and billionaires. This bill says to use that money to reduce the interest rate on student loans,” Warren said. “So it’s a pretty direct choice – should America be investing billions of dollars in tax loopholes for billionaires or investing that money to help young people who are trying to get an education? I think spending should be consistent with our values.”

Well. That certainly would send a message about the nation’s “values,” but you know what could really help young people out with “money they can use to build an economic future and to strengthen the economy”? How about, robust economy in which they can get good, well-paying, career-advancing jobs — which is not accomplished by enacting stupid show taxes on the wealthy, further convoluting our tax code, and placing more burdens on investors and job creators.

The real point of this exercise, of course, is to point out yet another way in which Republicans are ostensibly protecting their rich robber-baron buddies at the expense of our country’s poor, struggling future leaders, but the reality is that the federal government created this indeed tremendously problematic $1 trillion+ student loan bubble in the first place by offering indiscriminately available and inexpensive loans to anyone and everyone who might want them.

]]>http://hotair.com/archives/2014/05/07/sen-warren-hey-lets-help-students-refinance-their-loans-by-raising-taxes-on-the-wealthy/feed/74307296WSJ: College costs and inter-student subsidization getting more and more bloatedhttp://hotair.com/archives/2014/01/11/wsj-college-costs-and-inter-student-subsidization-getting-more-and-more-bloated/
http://hotair.com/archives/2014/01/11/wsj-college-costs-and-inter-student-subsidization-getting-more-and-more-bloated/#commentsSun, 12 Jan 2014 00:01:19 +0000http://hotair.com/?p=293140Whenever the Obama administration has periodically addressed the issue of the United States’ staggering and ever-mounting level of student-loan debt, it’s generally been with half-assed policy proposals that are meant to act as financial band-aids that do not attempt to substantively reform what is very clearly a broken system (and indeed, probably end up causing more harm than good in the long run). As the federal government continues to indiscriminately dish out inexpensive loans to any and all students, college costs have only continued to skyrocket — and the WSJ reports that the longstanding university financial setup in which more well-off students help to subsidize the costs of their less-wealthy classmates’ tuition is now metastasizing at an unsustainable rate and taking an increasingly big bite out of the middle class:

Well-off students at private schools have long subsidized poorer classmates. But as states grapple with the rising cost of higher education, middle-income students at public colleges in a dozen states now pay a growing share of their tuition to aid those lower on the economic ladder.

The student subsidies, which are distributed based on need, don’t show up on most tuition bills. But in eight years they have climbed 174% in real dollars at a dozen flagship state universities surveyed by The Wall Street Journal.

During the 2012-13 academic year, students at these schools transferred $512,401,435 to less well-off classmates, up from $186,960,962, in inflation-adjusted figures, in the 2005-06 school year. …

At the University of Washington for instance, a full-time student paying in-state tuition last year contributed about $2,200 in subsidies, up from $540 in 2006. …

But opaque college financing generally keeps this accounting hidden from public view, Ms. Finney said, largely to keep a lid on complaints from parents.

It’s yet another piece in the disastrous puzzle of our wildly federally-subsidized student loan system and its unintended consequences: Total student debt in the U.S. is now approaching $1.2 trillion, with this year’s college graduates owing a whopping $32,500 on average; add cash-strapped middle-class families and fresh graduates’ still-diminished job prospects, and it’s a recipe for a prohibitively burdensome financial situation that will plague their young-adult lives. Unfortunately, the biggest related Congressional plan in the works is coming from a group of Democratic senators (spearheaded by the likes of the “fairness”- and “inequality”-slinging Elizabeth Warren) that are looking to pump still more federal money into the system and “ensure struggling borrowers are better informed and treated fairly by loan servicers and colleges” — a.k.a., yet another progressive agenda item meant to treat the symptoms without curing the underlying disease.

]]>http://hotair.com/archives/2014/01/11/wsj-college-costs-and-inter-student-subsidization-getting-more-and-more-bloated/feed/27293140The Obama administration’s new-and-improved student-loan crisis plan, isn’thttp://hotair.com/archives/2013/10/01/the-obama-administrations-new-and-improved-student-loan-plan-isnt/
http://hotair.com/archives/2013/10/01/the-obama-administrations-new-and-improved-student-loan-plan-isnt/#commentsTue, 01 Oct 2013 22:41:53 +0000http://hotair.com/?p=281115Yet another consequence of our stubbornly stagnating economy is the degree to which young people increasingly find themselves unemployed, underemployed, and otherwise delayed in starting down the road of their adult career paths. That, in turn, rather adversely effects their collective ability to start paying down those gigantic loans many of them took out to pay for college educations — which helps to explain why the rate of student-debt default is still rising precipitously, via Bloomberg:

About one in seven borrowers defaulted on their federal student loans, showing how former students are buckling under higher-education costs in a weak economy.

The default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before, the U.S. Education Department said today. Based on a related measure, defaults are at the highest level since 1995.

The fresh data follows the announcement by Barack Obama’s administration that it would seek to restrain skyrocketing college expenses by tying federal financial aid to a new government rating of costs and educational outcomes.

Yes, about that practically worthless plan of creating what is basically a knockoff of already-existing college rankings systems that President Obama unveiled with much fanfare last August: It is yet another mistaken attempt from the Obama administration to alleviate some of the symptoms of a problem without actually addressing the underlying disease, and the other and somewhat less-noticed part of that same plan sounds an awful lot like it’s going to be directly feeding the disease. Coming soon, still more Obama-admin PR geared at getting young people to like them, via the NYT:

Largely overlooked was a more immediate change that could make a dent in the rising number of student-loan borrowers going into default. Starting next month, the Department of Education will contact borrowers who are struggling to repay their federal loans to make sure they know all the options available to them.

“We think there are lots of people who could benefit from our income-based repayment programs but haven’t signed up, and we want to get to them before they default,” said Arne Duncan, the education secretary. “The challenge is getting the word out.”

To do that, the department is planning to send e-mails to those who seem most likely to benefit from the programs, explaining debt-relief plans based on the borrower’s income. …

Education Department officials stress that the programs are not meant for all borrowers, but as a safety net for those struggling with education debt. That is an ever-larger group as debt loads and defaults keep rising.

To borrow a phrase from President Obama, let me be clear: The single largest problem students are facing today is the easy, cheap, and indiscriminate availability of student loans that heighten demand and help universities raise their prices, proactively pursued as a matter of government policy. The Obama administration has done nothing to alleviate the phenomenon, and now they’re going to send out still more signals about how “easy” it will be to repay these huge loans after you graduate with a little help from Your Friend, The Federal Government.

If the federal government could perhaps just stop interfering in free markets, which would have the doubly beneficial effect of removing fuel from the student-loan crisis fire as well as engendering well-paying job opportunities for young people, it would do them a world of good beyond anything their relentlessly counterproductive panders can every accomplish.

]]>http://hotair.com/archives/2013/10/01/the-obama-administrations-new-and-improved-student-loan-plan-isnt/feed/24281115Krauthammer: The govt intrudes in pretty much everything, and “now it’s going to regulate graduation rates?”http://hotair.com/archives/2013/08/23/krauthammer-the-govt-intrudes-in-pretty-much-everything-and-now-its-going-to-regulate-graduation-rates/
http://hotair.com/archives/2013/08/23/krauthammer-the-govt-intrudes-in-pretty-much-everything-and-now-its-going-to-regulate-graduation-rates/#commentsFri, 23 Aug 2013 15:21:37 +0000http://hotair.com/?p=276118More on President Obama’s new plan to capture the attention of young voters while also just happening to mention that health care law for which they should really sign up, by the way try to help guide the country’s tuition inflation problem on a downward trajectory. House Education & Workforce Committee Chairman John Kline was skeptical that the proposal will really amount to all it’s cracked up to be, and warned of the economic dangers of more federal intervention in the education market:

While I am pleased the president’s new plan recognizes the importance of promoting innovation and competition in higher education, I remain concerned that imposing an arbitrary college ranking system could curtail the very innovation we hope to encourage – and even lead to federal price controls. As always, the devil is in the details, and I look forward to examining the president’s proposal further as part of the committee’s ongoing efforts to reauthorize the Higher Education Act and help improve college affordability and access.

And as I argued yesterday, the administration’s supposedly competition-focused proposed solution to tuition inflation and ballooning loads of student debt really just tiptoes around the edges of the underlying problem without actually getting at it — the underlying problem, of course, being the cheap and easily attainable federally-subsidized students loans that influence students’ decision-making as well as heightens demand. Richard Vedder at Bloomberg explains that a few parts of the plan might be good in theory, but it still isn’t fixing and might even be worsening that rather glaring hitch:

The president’s proposal has one very bad idea: a forgiveness boon for those paying off loans right now. The proposal, limiting loan payments to 10 percent of income, potentially relieves millions of students from repaying part of their obligation. So why not major in fields the economy values least — anthropology or drama instead of engineering or math — if you don’t have to worry about earning enough to pay off your student loans over a certain period?

The idea simply raises incentives for future students to borrow more money, if they know their obligation to pay it back is capped. That, in turn, allows colleges to keep raising costs.

Obama proposes to ignore or worsen the root cause of much of the explosion in student costs: the federal financial assistance programs that encourage schools to raise costs and that haven’t achieved their goals of providing college access to low-income Americans.

Vedder explains another side effect wherein the plan could actually kill the educational innovation that it claims to want to spur — just like so many of the Obama administration’s other grandiose economic schemes that may have had lovely intentions but in practice are fraught with unintended consequences. As Charles Krauthammer put it last night, is “the federal government not intrusive enough in all other areas of our life and now it’s going to regulate graduation rates? … I think there are things that ought to be organic and independent and higher education is one of them.”

]]>http://hotair.com/archives/2013/08/23/krauthammer-the-govt-intrudes-in-pretty-much-everything-and-now-its-going-to-regulate-graduation-rates/feed/58276118Hmm: Obama unveils new plan for college-rating system and federal aidhttp://hotair.com/archives/2013/08/22/hmm-obama-unveils-new-college-rating-system-plan/
http://hotair.com/archives/2013/08/22/hmm-obama-unveils-new-college-rating-system-plan/#commentsThu, 22 Aug 2013 23:31:06 +0000http://hotair.com/?p=276038Yeesh. Another day, another way in which President Obama endeavoring to institute policies that nip at the heels of runaway problems without actually fixing said problems.

President Obama declared a crisis in the soaring cost of higher education here Thursday and unveiled a broad new plan that aims to make college education more affordable by tying federal financial aid to new college ratings.

The plan, which Obama rolled out as he opened a two-day campaign-style bus tour of college campuses, would create a rating system beginning in 2015 to evaluate colleges on tuition, the percentage of low-income students, graduation rates and debt of graduates.

Eventually, as an incentive for schools to make improvements in these areas, federal financial aid would be awarded based on those ratings. Obama said he could create the ratings system through executive action, but the plan to reallocate federal aid based on the ratings would require congressional approval.

The ever-rising rates of tuition inflation and student debt are certainly massive problems for the health and structure of our economy, but one of the largest factors that has contributed to them is the cheap and easy availability of federally subsidized students loans that have shaped the decision-making of young people over other options and allowed colleges to keep hiking their prices. It certainly doesn’t sound like the worst thing his administration has ever come up with, but I’m not convinced that the proposal is going to do much to get at the underlying problem and I’m pretty sure there could be some pretty nasty unintended consequences — the sort of which top-down government interference is wont to beget. Like the student-loan crisis in the first place. I’m no education expert, though — see NRO, Marginal Revolution, and ViaMeadia for some good thoughts.

]]>http://hotair.com/archives/2013/08/22/hmm-obama-unveils-new-college-rating-system-plan/feed/63276038Senate reaches a deal on student loans, and there was much rejoicinghttp://hotair.com/archives/2013/07/18/senate-reaches-a-deal-on-student-loans-and-there-was-much-rejoicing/
http://hotair.com/archives/2013/07/18/senate-reaches-a-deal-on-student-loans-and-there-was-much-rejoicing/#commentsThu, 18 Jul 2013 20:41:12 +0000http://hotair.com/?p=270565Last summer, President Obama managed to make quite the niche campaign issue out of the scheduled rise of interest rates on new federal student loans from 3.4 to 6.8 percent as a part of his appeal for the youth vote, and Congress agreed to extend the artificially low rates for another year. That provision expired on July 1st, and the Senate has since been quibbling about about disallowing the jump in interest rates once more — with Republicans insisting that rates need to be allowed to more accurately reflect the market value, while Democrats maintained that rates shouldn’t be allowed to climb too high (“too high,” of course, meaning whatever arbitrary number that they oh so augustly deem “fair”).

And there it is, just what the Senate has been so actively hankering for — compromise! Republicans succeeded in allowing the free market to play at least more of a role in determining rates, while Democrats got their caps on the maximum to which interest rates will be allowed to rise. In the meantime, they’re preventing the immediate jump to 6.8 percent and extending the 3.4 percent rate through the 2015 academic year. Via CNN:

Under the compromise measure, undergraduate students would pay a rate of 3.85% next year on subsidized and unsubsidized Stafford loans. The plan would cap rates on loans to undergrads at 8.25%, for graduate students at 9.5% and parents at 10.5%.

“While this is not the agreement that any of us would have written, and many of us would like to have seen something quite different, I believe we have come a very long way on reaching common ground,” Sen. Dick Durbin of Illinois, the Democratic whip in the Senate, said at a press conference Thursday.

Sen. Tom Harkin, the Democratic chairman of the committee that oversees federal education programs, also was present in announcing the deal. …

Speaking after Thursday’s news conference, Harkin said lawmakers may revisit the student loans issue when his committee wades into altering the Higher Education Act in the next several months. …

“Can we change it? Sure we can change it,” Harkin told reporters. “This is not the Ten Commandments written in stone for God’s sake.”

Er… I don’t know how well that plays out for instilling the certainty off of which potential students can devise possible life plans, but there it is. It’s a small improvement, but in the meantime, the federal government is maintaining plenty of the interference in the free market that directly helps to inflate tuition prices by flooding the market with cheap aid, and students are still graduating into a stagnating economy that is hardly flush with available jobs or even showing any real signs of becoming so — which kind of cuts into their ability to even pay back their loans. Priorities.

When the last reports came out showing that youth unemployment had reached 16.2 % in the United States, alarm bells began to be heard in some quarters. This is more than double the rate of unemployment of the adult population. The rate is fast approaching the average youth unemployment rate in Europe which stands at approximately 24%. …

So far only 5 European countries (Austria, Denmark, Germany, the Netherlands and Norway) have lower youth unemployment than does the U.S. Samuel Gregg, of the Acton Institute, who recently wrote Becoming Europe, warns that the U.S. is drifting towards the same policies that generally lead to higher rates of joblessnes among the young. The U.S. economy still scores better than most European countries in economic freedoms, but the trends are frightening.

]]>http://hotair.com/archives/2013/07/18/senate-reaches-a-deal-on-student-loans-and-there-was-much-rejoicing/feed/24270565Senate still trying, failing to adopt a student-loan fixhttp://hotair.com/archives/2013/07/10/senate-still-trying-failing-to-adopt-a-student-loan-fix/
http://hotair.com/archives/2013/07/10/senate-still-trying-failing-to-adopt-a-student-loan-fix/#commentsWed, 10 Jul 2013 22:01:04 +0000http://hotair.com/?p=269134In the wake of the Senate’s passage of the immigration bill the other week, they’ve been trying — and failing miserably — to fill their legislative agenda with an extension of last year’s stopgap that held the interest rate for federally subsidized student loans at 3.4 percent. That provision expired on July 1st, meaning that rates for new loans jumped up to 6.8 percent, and they’re hoping to do something about it before students need to lock up their loans before college begins toward the end of August. The House has already passed a solution that would (quelle horreur!) tie interest rates with financial markets more so than lawmakers’ discretion — a move that President more or less tacitly endorsed in his budget, but the White House is declining to explicitly support — and Democrats refuse to do so without requiring some kind of (completely arbitrary) price cap.

After an earlier measure failed to extend the 3.4 percent rate for two years, the Senate tried again on Wednesday morning with a one-year extension. Nothing doing.

Hoping to avert that outcome, the Senate teed up a test vote on a proposal to return rates to 3.4 percent for one year. Republicans, though, blasted it as a stopgap, “kicking the can” fix that did not address the broader issue.

The bill, which needed 60 votes to advance, failed as expected on a 51-49 vote. …

Senate Democrats are ignoring a bill that House Republicans already passed, while Republicans say the Senate bill is not the solution. …

But chamber leaders so far have refused to take up a measure that passed the House that would link interest rates to the financial markets.

That bill incorporated an idea that was included in President Obama’s budget. The White House, though, has not publicly put its weight behind the House proposal. …

“The president, as you know, is for a long-term fix here, but we are generally for a resolution of this problem because we have already passed the deadline whereby students face a doubling of their loan rates,” White House Press Secretary Jay Carney said. “Supporting a single bill is not the answer here. Supporting a compromise that can get the votes necessary that meets the president’s principles is our position.”

And this latest fizzle only came after much internal agonizing, via WaPo:

The failed key test vote came after contentious discussions Tuesday, much of it between Democrats who have been split on the issue. Senate Majority Leader Harry M. Reid (D-Nev.) met for hours with White House Chief of Staff Denis McDonough and Education Secretary Arne Duncan. At the weekly Democratic caucus luncheon, Sen. Elizabeth Warren (D-Mass.) harshly criticized Sen. Joe Manchin III (D-W.Va.) for sponsoring a bill with Republicans that would tie interest rates for all major federal education loans to market rates but would not impose a formal cap on how high those rates could go in future years.

After that lunch, Reid addressed reporters and stressed that lawmakers need to approve the rate extension instead of not taking action. Reid and other leaders have opposed allowing for an ever-changing interest rate without a stated cap to protect future generations of students from much higher rates. Just steps away, Manchin and two co-sponsors of the other bill hosted their own media event, saying that all students need interest rate relief and senators cannot continue to delay making a decision.

Again, this is all a lot of hoopla for one heck of a pitiful “solution” to the dilemmas facing young people. The real problem here is the tuition inflation that these loan-subsidization policies are directly creating, not to mention the stagnating economy and shrinking labor market into which students are currently graduating (it’s pretty tough to pay off your student loans these days when it’s now a boon to secure even part-time employment!). As the WSJ points out, however, Senate liberals don’t seem to care as much about the damaging effects of this type of legislation as they do throwing a bone to their constituents in the nonprofit academic world. Just business as usual:

As the Senate prepares for Wednesday voting on student-loan subsidies, a coalition that includes congressional Republicans, President Obama and moderate Democrats favors reform that ties the rates on student loans to the 10-year Treasury rate. This protects taxpayers from having to guarantee low fixed rates to students while the government’s own borrowing costs rise. …

But in recent years an historic surge in student-loan debt is changing education for many borrowers from a winning investment into a staggering burden. Such debt has nearly tripled since 2004 and now hovers around $1 trillion, with defaults rising on student loans and other types of debt held by these young borrowers. …

Liberals apologize for the price hikes imposed by their friends in the faculty lounge by pretending that universities are starved for revenue. Rep. Frank Pallone (D., N.J.) claimed on MSNBC on Saturday that “the federal government is not making the investment in higher education.” Perhaps he’s forgotten that annual Pell grant spending of $34 billion has roughly doubled in the Obama era, or that Uncle Sugar now originates more than $100 billion in annual loans. …

No one should be surprised that one of the chief sponsors of this anti-reform bill is Senator Elizabeth Warren (D., Mass.), not even a year removed from her membership on the Harvard faculty. During the August recess she can expect a warm welcome in Cambridge.

]]>http://hotair.com/archives/2013/07/10/senate-still-trying-failing-to-adopt-a-student-loan-fix/feed/23269134Senate Democrats searching for another student-loan rate stopgaphttp://hotair.com/archives/2013/07/08/senate-democrats-searching-for-another-student-loan-rate-stopgap/
http://hotair.com/archives/2013/07/08/senate-democrats-searching-for-another-student-loan-rate-stopgap/#commentsMon, 08 Jul 2013 18:41:05 +0000http://hotair.com/?p=268688Along with immigration and the in-limbo status of the farm bill, the issue of student loans will also be atop the Congressional agenda as lawmakers return from the July 4th recess. Last week, the fixed rate for federally subsidized student loans automatically jumped from 3.4 to 6.8, and rather than take up the House GOP’s suggestion that they allow the rate to be tied more closely to — you know — the free market rather than lawmakers’ most arbitrary and political whimsies, Senate Democrats insisted that the GOP’s was an unacceptable solution and instead allowed the stopgap measure holding over the rates from last summer (before the election, hem hem) to expire.

The new rate, however, will only apply to new federally subsidized loans, for which students will be signing up in earnest over the following month or so — and Democrats are hoping to get something, even just another temporary measure, resolved before the new college school year starts. Via Politico:

In the days since the missed deadline, Washington’s political apparatus has been a muddle of messaging. House Republicans are blasting Senate Democrats for not passing a bill as the lower chamber has done, albeit one that President Barack Obama has threatened to veto. And lawmakers from both parties are now using the #DontDoubleMyRate hashtag on Twitter, first popularized by Obama at the height of last year’s presidential campaign.

Senate leaders concede that the optics aren’t great. A Democratic leadership aide called the situation “awkward,” adding: “We need to get it resolved.” …

The Senate will quickly focus on getting the issue off its plate, especially since there is no clear legislative priority list yet post-immigration bill. Leaders are mulling putting forward bipartisan energy efficiency and pharmaceutical safety bills, a defense reauthorization or perhaps an appropriations bill.

How exactly that happens remains as “clear as mud,” as one aide put it. The Senate is angling for a vote on a proposal sponsored by 42 Democrats that would extend for a year the rate of 3.4 percent for those subsidized loans. Sen. Tom Harkin (D-Iowa) said he thought Republicans might sign on to another one-year extension after doing so last year. …

The House already passed its own fix (on which the White House bizarrely issued a veto threat, seeing as how the proposals weren’t that different), and Republicans are looking to put the hammer down this week and get the issue off the table:

Rep. Lynn Jenkins, R-Kansas, faulted Senate Democrats on Saturday for this week’s hike in student loan interest rates and urged the upper chamber to pass legislation that resolves the issue as soon as the holiday recess ends.

“For too long, politicians have been in charge of setting these rates, and we keep coming back to cliffs and deadlines like this one,” Jenkins said in the GOP weekly address. “Paying for college is difficult enough without all this uncertainty. I have two kids in college, I know how hard it can be.” …

Top Senate Democrats want a cap in place to protect students if interest rates spike. That is at odds with the slightly different proposals from President Barack Obama and various congressional Republicans, which are tied to 10-year Treasury bond rates and would include charges for administrative costs but would not include caps.

Republicans, who prefer a more market-based approach, often point out that the White House’s proposal falls more in line with their own.

“When President Obama proposed letting the markets set interest rates instead, the Republican-led House passed a bill reflecting his plan,” Jenkins said. “Republicans in the Senate came to the table with similar ideas. Unfortunately, Senate Democrats attacked the president’s plan, refused to work with us, and allowed this rate hike to take effect, leaving for the July 4th holiday without passing a solution.”

All of which, at the end of the day, is still relatively trivial anyway, seeing as how a doubled rate would only add a matter of a few dollars to the average student debtors’ payments, and the real, glaring, intractable problems are both the government’s endless interference directly inflating tuition prices and the poor economy and employment scenario into which young people are graduating. Ugh.

]]>http://hotair.com/archives/2013/07/08/senate-democrats-searching-for-another-student-loan-rate-stopgap/feed/19268688Interest rates on federally subsidized student loans officially doublehttp://hotair.com/archives/2013/07/01/interest-rates-on-federally-subsidized-student-loans-double/
http://hotair.com/archives/2013/07/01/interest-rates-on-federally-subsidized-student-loans-double/#commentsTue, 02 Jul 2013 01:21:44 +0000http://hotair.com/?p=267941In the summer heat of the election last year, Congress passed a one-year extension on keeping the interest rate for federally subsidized Stafford loans for college students at the artificially low rate of 3.4 percent — and the sand finally ran out on that temporary stopgap today, hiking the rate up to 6.8 percent. Republicans have been proposing to link students loan rates to the freer financial-market benchmarks instead of allowing Congress to arbitrarily determine what they deem to be an appropriate rate, while Democrats are looking to keep the interests rates as low as they in their infinite wisdom see fit. There’s still a possibility that Congress could pass some kind of deal in the near future, but an agreement isn’t looking likely, via Fox News:

President Obama included a variation of that market-based approach in the budget he sent to Congress earlier this year, leaving his fellow Democrats trying to block his efforts.

“Why Senate Democrats continue to attack the president’s plan is a mystery to me, but I hope he’s able to persuade them to join our bipartisan effort to assist students,” Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, said last week

Senate Majority Leader Harry Reid said that a proposal to tie loan rates to the 10-year treasury note yield could never pass the Senate and that he couldn’t back something that doesn’t include stronger protections for students and parents.

“There is no deal on student loans that can pass the Senate because Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families, instead of closing tax loopholes for the wealthiest Americans and big corporations,” Adam Jentleson, a spokesman for Reid, told Fox News last week. “Senate Democrats continue to work in good faith to reach a compromise but Republicans refuse to give on this critical point.”

Er, we shouldn’t reduce the deficit on the backs of students and the middle class? How about we shouldn’t be continually growing the deficit, the consequences of which will eventually fall upon students and the middle class? Anyone?

Is this particular hike on certain student loans really such a bad thing, however, for everyone involved in the long run? As Neal McCluskey points out at Cato, the federal government’s interference is directly responsible for a lot of the massive tuition inflation that’s been going on in recent years:

In the long term, it might actually be good if these rates – which will only affect some federal borrowers – go up. (Congress could still lower them retroactively.) Why? Because federal aid has fueled decades of rampant price inflation, giving basically anyone whom a college would accept – and many colleges will accept anyone – the money necessary to pay sky-high prices. Perhaps the rates rising will dissuade some people from going to college who should be doing something else, or some people going to college who should be there from choosing a more expensive school that offers no better academics but lots of superfluous frills.

Although the uptick likely won’t have a major effect on too many consumers’ choices, higher interests rates could perhaps dissuade some potential students from taking on the costs, and force institutions to streamline their budgets and/or the market to diversify with more and more efficient and practical education options.

]]>http://hotair.com/archives/2013/07/01/interest-rates-on-federally-subsidized-student-loans-double/feed/38267941Obama on student loan rates: “It’s like déjà vu all over again.” …Yes, yes it is.http://hotair.com/archives/2013/05/31/obama-on-student-loan-rates-its-like-deja-vu-all-over-again-yes-yes-it-is/
http://hotair.com/archives/2013/05/31/obama-on-student-loan-rates-its-like-deja-vu-all-over-again-yes-yes-it-is/#commentsFri, 31 May 2013 20:41:02 +0000http://hotair.com/?p=263196As I mentioned he would be earlier this week, President Obama dedicated his Friday morning to educating the youths he used as backdrops at the White House about why it is that the GOP’s idea to fix this cyclical federal student-loan battle by tying interest rates to the market, instead of the president’s own plan allowing politicians to continue to arbitrarily determine the interest rates that they deem appropriate, is such a very terrible take on the problem. It went pretty much exactly as you’d expect.

Key words: “Fair.” “Investments.” “Not the time for us to turn our back on young people.” Ugh.

Let us overlook for a moment the fact that the president is perpetuating a student-loan bubble via a broken system that floods that market with too much demand that in turn causes college prices to just keep right on rising, and focus instead on the fact that the differences between the president’s and the GOP’s plans will have a negligible impact on actual student-loan payments. This is just politics as usual, via the WSJ:

House Education Chairman John Kline’s bill sets floating rates on new Stafford loans at the 10-year Treasury rate plus 2.5%, while also protecting borrowers by capping the rates at 8.5%. Under this plan, a borrower can consolidate his loans after graduation to achieve a fixed rate.

Mr. Obama’s plan is purely for fixed, not floating, rates at the 10-year Treasury rate plus 0.93% or 2.93% depending on the type of Stafford loan, and it has no rate cap. We wish both the House and Mr. Obama would drive a harder bargain on behalf of the taxpayer, but they aren’t separated by a difference of philosophy. A spread of 93 or 293 basis points means the President cares about young people, but 250 basis points signifies unspeakable cruelty? …

Under either plan, rates for new Stafford loans for undergraduates will not nearly rise all the way to 6.8% from 3.4%, as they are scheduled to do on July 1. But the White House likes to run against a doubling of rates even when, as in this case, they are running unopposed. It has been a good political issue for Team Obama in the past, and there’s another reason they may regard it as favorable ground to attack imaginary adversaries.

Hey, if President Obama really wants to focus in on helping young people with life after college, maybe we could worry a little less about piddling, stimulus-esque, big-government market interferences and a little more on our sluggish economy and 16 percent youth unemployment rate? Anyone?

]]>http://hotair.com/archives/2013/05/31/obama-on-student-loan-rates-its-like-deja-vu-all-over-again-yes-yes-it-is/feed/30263196Overdue student loans hit an all-time high as Obama prepares to hype low rateshttp://hotair.com/archives/2013/05/29/overdue-student-loans-hit-an-all-time-high-as-obama-prepares-to-hype-low-rates/
http://hotair.com/archives/2013/05/29/overdue-student-loans-hit-an-all-time-high-as-obama-prepares-to-hype-low-rates/#commentsWed, 29 May 2013 22:01:11 +0000http://hotair.com/?p=262850On Friday, President Obama will once more revive one of his ol’ campaign-favorite memes and remind college-age and younger voters of what it is exactly the Democrats can do for them — besides, you know, engendering a sluggish economy with a youth unemployment rate of sixteen percent, but I digress. On the campaign trail last summer, the president spoke to younger crowds about preventing the interest rate on federally subsidized Stafford loans from doubling to 6.8 percent as a way of boosting the economy, and Congress sent up a one-year extension of of the 3.4 percent rate for him to sign — but the sand is about to run out on the extension come July 1st, so it’s obviously time for some more campaigning on how the GOP doesn’t care about young people, or something.

President Obama will urge Congress to halt an upcoming hike in student loan interest rates during an event with college students at the White House on Friday, White House Press Secretary Jay Carney said Wednesday.

“While we welcome that House Republicans have paid some attention to this issue this year, their proposal unfortunately does not meet the task,” Carney said at the White House press briefing. “The president will call on Congress to pass a solution that truly helps keep college affordable for middle class families and students.”

In case you missed it, the GOP has indeed ‘paid some attention’ to the issue this year; just last week, the House passed a bill that proposed to — quelle horreur — tie future rates to the market instead of allowing the federal government to artificially manipulate the market with an arbitrarily determined rate, but it’s going nowhere in the Democratic Senate and our esteemed president has already issued a veto threat.

The bill was approved on party lines, 221-198. Senate Democrats oppose the bill and the White House issued a veto threat on Wednesday, so its prospects are dim. Democrats want to extend current rates for two more years to allow more time to find a permanent fix. …

The House Republicans’ proposal would tie loan rates to the interest rate on a 10-year Treasury note, plus 2.5 percentage points, with a cap that would prevent the interest rate on Stafford loans from rising above 8.5%. President Obama’s budget called for setting the rate at slightly less than 1 percentage point above the Treasury note rate.

The GOP plan would also reset the loan rate for all borrowers every year based on market fluctuations, while under Obama’s proposal, any borrower’s initial loan rate would remain fixed for the life of the loan.

Of course, allowing even just a partial return to free-market economics in any sphere is rarely the Democrats’ game, as established niche benefits once relentlessly seized upon as campaign tools are not to be relinquished — so it’s back to the drawing board on that one, nevermind that all of this manipulation and flooding the market with artificially cheap loans isn’t doing students nor anyone else any favors in the long run. Total U.S. student debt has already surpassed a whopping $1 trillion, and student debt delinquency rates are getting seriously alarming, Bloomberg reports:

Overdue student loans reached an all-time high as students struggle to find work after college, according to a government report renewing alarms about the rising burden of higher-education debt.

Eleven percent of student loans were seriously delinquent — at least 90 days past due — in the third quarter of 2012, compared with 6 percent in the first quarter of 2003, according to the report by the U.S. Education Department. Almost 30 percent of 20- to 24-year-olds aren’t employed or in school, the study found.

Of course, I’d imagine the president will use these figures as reasons why student loans need to remain cheap — i.e., we need to make sure students can afford to pay their loans back and help them out during this rough economic time — except that his proposed policy will do nothing to help fix the problem of an overcrowded and inhibited market that perpetuates the notion that a four-year college degree is the best route for the greatest number of young people and the economy as a whole to succeed. It’s not going to accomplish anything except continue to distort price signals and continue to drag down our struggling economy in which it is increasingly difficult for young people to start their careers.

]]>http://hotair.com/archives/2013/05/29/overdue-student-loans-hit-an-all-time-high-as-obama-prepares-to-hype-low-rates/feed/73262850By the way: Total student loan debt now topping one trillion dollarshttp://hotair.com/archives/2013/04/12/by-the-way-total-student-debt-now-topping-one-trillion-dollars/
http://hotair.com/archives/2013/04/12/by-the-way-total-student-debt-now-topping-one-trillion-dollars/#commentsFri, 12 Apr 2013 17:21:43 +0000http://hotair.com/?p=254586It’s a rough job market for anyone looking for work as we continue to just barely break stagnation levels in the Slowest Recovery Ever, but the picture is particularly bleak for the fresh-faced youths looking start careers. According to a new economic report, the situation is going to be “extremely difficult” for the crop of 2013 college graduates:

Unemployment remains high for young college grads. For those who will find jobs, many will probably have to settle for low-level positions, the Economic Policy Institute said Wednesday.

The unemployment rate for recent college grads between the ages of 21 to 24 has averaged 8.8% over the last year, according to Labor Department data.

Once you also include young grads who are working part-time for economic reasons, and those who have stopped looking for a job in the last year, the so-called “underemployment rate” is a whopping 18.3%. …

“On average, they are not going to do well,” said Heidi Shierholz, an EPI economist and co-author of the report. “They will face lower earnings, than they otherwise would have, for maybe the next couple of decades.”

The CNN article also notes that, as of 2012, about 52 percent of employed college graduates under age 25 were working in jobs that don’t even require a college degree, up from 40 percent in 2000. That means that a lot of those kids probably took on a heap of college debt — so not only are they not seeing any practical returns, but they’re short on the means to start paying back those loans… which, in turn, means that some of the burden is foisted upon their near-retirement parents, who in turn might have to delay retirement even longer… Dang. There are all kinds of vicious cycles spinning out of this mess.

We recently hit the one-trillion dollar threshold for combined private and student loan debt, and that number just keeps on climbing. Too many graduates can’t afford to pay back their loans, and many aspiring kids can’t afford to go to college without a loan — and they’re all going to be stuck with the accompanying economic consequences for some time.

“Student debt has a dramatic impact on the ability to buy a house, and to buy the dishwashers and the lawnmowers and all th eother purchases that stem form that,” said diane Swonk, chief economist at Mesirow Financial. “It has a ripple effect throughout the economy.”

“Combined private and federal student debt doubled since 2007 to $1.1 trillion, according to Consumer Financial Protection Bureau and New York Federal Reserve data, as parents became less able to fund educations in the years following the 2008 financial crash. Homes lost about a third of their value while prices tumbled, leaving many owners owing more on their mortgages than their properties were worth.

Sidebar: Time to rethink a traditional four-year college degree as a necessarily wise investment?

]]>http://hotair.com/archives/2013/04/12/by-the-way-total-student-debt-now-topping-one-trillion-dollars/feed/67254586Is Jack Lew the Forrest Gump of Obama’s second-term Cabinet?http://hotair.com/archives/2013/02/22/is-jack-lew-the-forrest-gump-of-obamas-second-term-cabinet/
http://hotair.com/archives/2013/02/22/is-jack-lew-the-forrest-gump-of-obamas-second-term-cabinet/#commentsFri, 22 Feb 2013 19:41:36 +0000http://hotair.com/?p=246007Funny, I thought that might have been Chuck Hagel, but the Wall Street Journal isn’t talking about candlepower. Their editorial today notes that Jack Lew, the nominee to replace Tim Geithner at Treasury, has almost literally been involved in everything that Democrats demonized in the 2012 election cycle. And where financial drama has occurred, Lew manages to pop up like an unwanted nut crunch in a box of chocolates:

Senate Democrats are in a hurry to confirm Jack Lew as Secretary of the Treasury before anyone notices his biography. Otherwise, liberal lawmakers might be embarrassed voting for a man who represents everything they’ve been campaigning against.

Investor in Cayman Islands tax haven? Check. Recipient of a bonus and corporate jet rides underwritten by taxpayers at a bailed-out bank? Check. Executive at a university that accepted student-loan “kickbacks” for steering kids toward a favored bank? Check. Excessive compensation with minimal disclosure? Check.

Like a financial Forrest Gump, Mr. Lew keeps walking into the frame of the business-political dramas of the last decade. But unlike the lovable movie character, Mr. Lew is playing the villain of liberal financial lore. One very compelling role, highlighted by Sen. Chuck Grassley (R., Iowa), was Mr. Lew’s star turn as an administrator at a university that encouraged students to borrow from his future employers at Citibank.

As The Post first reported this week, Lew is under scrutiny for the $1.4 million loan he got from NYU. Lew told the Senate on Wednesday that he got a housing-assistance loan that was “forgiven” over a period of five years, plus another loan.

“That was probably calculated in order to minimize his income tax over that period,” a charity tax expert told The Post.

Lew and his wife used the loan to buy a home in the leafy Riverdale section of The Bronx. Lew has kept the home, which has increased in value from $1.3 million at the time of purchase to $1.8 million now.

Lew revealed the school provided an “annual payment” equal to the interest paid, which seems to indicate the school shouldered almost his entire monthly mortgage expense.

The administration has refused to say whether the school entirely forgave the loan when Lew left in 2006 to join Citigroup, although Lew has revealed that he got a “one-time severance payment.”

“They’re way off the charts,” Jeff Goodwin, a sociology professor at NYU, said of Lew’s cushy perks. “It’s in another world from where we live.”

At the time, Lew earned a salary of more than twice that of Barack Obama as NYU’s executive vice president — more than NYU’s president did, according to the Post. With a salary of $840K per year, why did Lew need another $1.4 million in loans, which apparently weren’t repaid? Perhaps the non-profit university might wonder about that as well.

The WSJ notes that Citibank became the school’s preferred lender during Lew’s tenure as EVP of operations. Lew says he didn’t personally approve that decision, but it seems a little coincidental that Lew left NYU for Citibank shortly after that arrangement. Citibank also paid NYU a fee of 0.25% on all student loans originating at the school in exchange for that relationship. What happened next?

Anyway, after Mr. Lew had left NYU to work at Citi, New York Attorney General Andrew Cuomo charged in 2007 that the school’s payments from Citi had not been adequately disclosed to students and that the school’s policy toward Citi created a conflict of interest and violated state laws. NYU settled without admitting any wrongdoing and agreed to a new code of conduct.

I seem to recall that the Obama administration used episodes like this to claim that students were being exploited by banks in the student-loan industry, as part of their effort to eliminate federal subsidies for the private student-loan market entirely. The White House succeeded in that effort, and now wants a man who may have contributed to that exploitation to run Treasury.

Will this embarrass Obama enough to withdraw Lew’s nomination? Probably not, since the media seems oddly disinterested in Democrats’ 2012 cycle bêtes noires now that the election is over:

We’d have thought this story would offend principled liberals, but then they’re also giving a pass to Mr. Lew’s fabulous compensation from the tax-exempt school. NYU students shoulder one of the highest collective debt burdens in the country as they struggle to afford one of the nation’s most expensive universities. For those who claim after watching Mr. Lew’s confirmation hearing that he doesn’t understand finance, we say: Check out his NYU compensation package. He sure knows how to get paid. …

The Grassley inquiry is unlikely to derail Mr. Lew’s nomination, because Senate Democrats, the White House and most of the media really don’t care. But Mr. Grassley is doing a public service in revealing how liberals redistribute income to themselves. And Mr. Lew is finally delivering educational value to youngsters by providing a lesson for the Obama era: If you want the big bucks, go into the world of taxpayer-backed enterprises.

]]>http://hotair.com/archives/2013/02/22/is-jack-lew-the-forrest-gump-of-obamas-second-term-cabinet/feed/34246007Survey: Higher ed tuition prices hitting an economic wall?http://hotair.com/archives/2013/01/11/survey-higher-ed-tuition-prices-hitting-an-economic-wall/
http://hotair.com/archives/2013/01/11/survey-higher-ed-tuition-prices-hitting-an-economic-wall/#commentsFri, 11 Jan 2013 21:01:00 +0000http://hotair.com/?p=238465During his many campaign rallies and speeches at college campuses across the country, President Obama has often talked up the government’s goal of providing ways to help make college more affordable for anyone who wants to go and the utmost importance of making student loan debt (now approaching a record total of $1 trillion, by the way) more manageable — which is precisely why it’s so off-putting when he then laments skyrocketing college tuition prices in the same speech. While there are certainly bureaucratic and institutional flaws that many universities could probably work on to help bring down tuition prices, the federal government has been actively engendering a higher-education bubble for years: When you put national policies in place that increase consumer demand for higher education, the price of higher education is going to go up, as any college student would hopefully learn in their Introduction to Economics class.

But with a now persistently awful youth unemployment rate (that recently broke the worst record since World War II) and declining median family incomes, it suddenly looks like more potential students and their parents are more carefully assessing whether such a huge investment in higher education is worth the risk. Decades of tuition increases may be winding down, according to a new survey by Moody’s Investors Service, as the waning demand for four-year college degrees saps a growing number of American colleges’ pricing power, reports the WSJ:

Facing stagnant family income, shaky job prospects for graduates and a smaller pool of high-school graduates, more schools are reining in tuition increases and giving out larger scholarships to attract students, Moody’s concluded in a report set to be released Thursday. …

For the fiscal year, which for most schools ends this June, 18% of 165 private universities and 15% of 127 public universities project a decline in net tuition revenue. That is a sharp rise from the estimated declines among 10% of the 152 private schools and 4% of the 105 public schools in fiscal 2012. …

Moody’s also attributed the enrollment decline at some public universities to a “heightened scrutiny of the value of higher education” after years of tuition increases and stagnating family income. The credit-rating firm said in its report that more students are “increasingly attending more affordable community colleges, studying part time, or electing to enter the workforce without the benefit of a college education.” …

In short, the federal government has been handing out easily attainable subsidies with which people have been acquiring degrees for which the post-college job world does not necessarily harbor a high demand, directly helping to jack up tuition rates; and in current conjunction with the less-than-robust Obama economy of high unemployment and declining wealth, enrollment is now on the decline — which means pretty big financial troubles may be in store for higher ed. This new normal might mean a huge readjustment is in the works in the secondary-education world, including a downshift from four-year liberal-arts degrees and an increase in online classes and vocational training, but kind of funny how these liberal policies so often accomplish the opposite of their intent, isn’t it?